Is this U.S.-China selloff a buy? A top Wall Street voice weighs in
Investing.com -- Deutsche Bank (ETR:DBKGn) shared insights from a recent visit to Beijing and Shanghai, shedding light on the challenges Chinese exporters are facing due to escalating U.S.-China trade tensions.
With tariffs now reaching 145%, the ability of exporters to absorb these costs is becoming increasingly unfeasible. This change has led to a halt in fulfilling new orders as companies rely on pre-positioned inventory in US warehouses.
The report highlighted that the recent "Liberation Day" tariff hike to 145% from the previous 34% is causing significant strain. Exporters who initially sought ways to manage the costs are now finding it impossible to do so without US buyers shouldering the majority of the tariff burden. The resulting decrease in exports may contribute to additional downward pressure on China’s producer prices, which are already in decline.
Despite these challenges, Deutsche Bank noted that many Chinese exporters have previously diversified their markets following earlier tariff disputes. Those who have progressed in diversifying away from the US market are now better positioned and are contemplating abandoning the US market altogether to concentrate on other regions.
In contrast, China’s overall shipments to countries other than the US have remained stable. However, companies heavily reliant on the US market are reducing or suspending their operations in the US, in anticipation of potential tariff reductions in the future.
The impact of the trade war is not one-sided, as US and European carmakers are also experiencing disruptions. These manufacturers, particularly those selling US-made high-end cars in China, are feeling the effects of China’s retaliatory tariffs. This situation underscores the broader implications of the trade war on global commerce and industry.
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